Subject of Scathing Report from VA Inspector General Picked to Lead Veterans Charity

Published 06/09/2014

"Ms. Hartmann had complete disregard for the laws, regulations, and VA policies which governed her ethical conduct, but even more egregious was her willingness to involve her subordinates in her misconduct. Among certain NPSE [National Programs & Special Events] staff, Ms. Hartmann's misconduct and bad examples fostered a culture that they were exempt from the rules that govern all other federal employees." —Department of Veterans Affairs Office of the Inspector General, "Abuse of Authority, Misuse of Position and Resources, Acceptance of Gratuities, & Interference with an OIG Investigation National Programs & Special Events," report dated February 5, 2010, p. 27.

Despite a history of misconduct during her time working for the U.S. Department of Veterans Affairs (VA) as Director of National Programs and Special Events (NPSE), Diane Hartmann has been appointed the new CEO of Help Hospitalized Veterans (HHV), a charity that raised over $23 million in cash donations in its fiscal year 2013. She replaces the former CEO, Michael Lynch, who was required to retire from his position as President and CEO and to resign, along with four other board members, from the HHV Board of Directors. The ouster of HHV's previous board of directors occurred as a result of an August 2013 settlement agreement in connection with a lawsuit initiated by the Office of the Attorney General (OAG) of California. The suit included claims that executive officers and directors of HHV improperly diverted funds intended for charitable programs. Preceding Michael Lynch as CEO was founder and long time president of HHV, the late Roger Chapin, a self-described "non-profit entrepreneur" who holds a spot on CharityWatch's Hall of Shame due to his long track record of using his charities to enrich himself and his friends while spending too little on the causes he touted.

HHV, which has a mission to provide therapeutic arts & crafts kits to armed service and military veteran patients receiving health care, has long received low grades of "F" and "D" from CharityWatch for low program spending and high fundraising costs, and currently receives an "F" grade based on its fiscal 2013 financial reporting. If you are to believe a May 8, 2014 letter written by HHV's new CEO and addressed to CharityWatch's president, HHV has been "revitalized" as a result of "important changes that have occurred" over the past 18 months. Cited as changes are the formation of a new Board of Directors in October 2013, and the appointment of its new CEO, Diane Hartmann. HHV's letter touts that its "change in leadership has not only revitalized our organization, but instilled an improved corporate culture focused on integrity, transparency, and renewed accountability." However, given the history of unethical workplace behavior that disgraces HHV's new CEO, along with the circumstances under which HHV's new Board of Directors was formed, CharityWatch questions whether or not HHV has really turned over a new leaf.

Diane Hartmann has a history of misconduct during her time working for the VA, according to a VA Office of Inspector General (OIG) report dated February 5, 2010. The OIG investigation substantiated that between the years 2006 and 2009 Hartmann:

Misused official time and travel;

Improperly used hundreds of hours of unauthorized compensatory leave for herself;

Failed to properly record compensatory time for her subordinates;

Interfered with an OIG investigation by destroying evidence, allowing a subordinate to destroy evidence, making a false theft report, and allowing a subordinate to file an erroneous theft report;

Accepted, and also allowed a subordinate to accept, gratuities valued at over $20 from a prohibited source;

Circumvented contractor acquisition requirements by repetitively splitting the payments for a recurring contract for photography services.

The OIG also found that in connection with Hartman's interference with the OIG investigation, Hartmann attempted to have a subordinate destroy emails, asked another subordinate to withhold material information, and tried to coerce a third subordinate by threatening exposure of a past personal indiscretion. Additionally, Hartmann made false statements while under oath to OIG investigators regarding the misuse of official travel for her personal gain, according to the OIG report. To provide some monetary values associated with Hartmann's misconduct per the OIG report, the unnecessary travel costs Hartmann incurred at the expense of the VA totaled approximately $4,900, and the unlawful and unauthorized compensatory leave time taken by Hartmann was worth over $21,000 in pay. CharityWatch thinks it is inexcusable that HHV appointed a CEO with a history of such unethical, dishonest, deceitful, coercive, policy-breaking, money-wasting behavior.

The May 8, 2014 letter sent by HHV to CharityWatch states that the new HHV Board of Directors has "no ties to the previous Board." However, HHV board members who resigned under the California OAG's settlement agreement were allowed to recommend their own replacements, subject to the approval of the OAG. Further, HHV's new CEO as of November 2013, Diane Hartmann, who herself was an HHV board member between January 2012 and January 2014, knew two HHV representatives well enough to go golfing with them in January 2009 (possibly using the same golf memberships allegedly purchased with the charity's funds, as previously reported by CharityWatch in 2012). The involvement of the prior HHV board members in recommending their replacements, as well as Hartmann's preexisting relationship with HHV and track record of misconduct at the VA, raises suspicion as to whether the "change in leadership" that HHV claims "has not only revitalized our organization, but instilled an improved corporate culture focused on integrity, transparency, and renewed accountability" will be any different than HHV's former leadership that ran a charity with poor financial efficiency and faced breach of fiduciary duty accusations by California's OAG.

As CEO of HHV, Diane Hartmann will likely have discretion over her travel activities, as well as organizational control over the millions of dollars raised by HHV each year, despite the fact that the OIG investigation substantiated that Hartmann's misconduct while working at the VA included the misuse of official time and travel. In fact, one incident related to Hartmann's unnecessary time and travel while at the VA involved HHV, and a second incident involved another major veterans charity, Disabled American Veterans (DAV). In January 2009, according to the OIG report, Hartmann used DAV as part of her excuse for unnecessary travel from San Diego to Las Vegas to supposedly assist the NPSE Winter Sports Clinic Director with an annual ski show. Hartmann claimed that a DAV representative cancelled attending the ski show at the last minute and that Hartmann was asked to go in her place, but the OIG report describes that Hartmann's excuse was discredited by the Winter Sports Clinic Director. Also refuting Hartmann's claim that she was a substitute for DAV is an individual whose name is redacted in the OIG report who said the DAV had not attended the ski show for the past four or five years and had no plans of attending in 2009, nor did she ask Hartmann to attend in DAV's place. Additionally, before unnecessarily flying from San Diego to Las Vegas for the supposed purpose of replacing DAV at the ski show, the OIG reports that Hartmann's unnecessary extended stay in San Diego included a sightseeing excursion on a Monday when Hartmann claimed that in the morning she worked on VA-related matters from her hotel room and in the afternoon walked around near the hotel trying to locate alternative meal facilities for a future veterans event. The OIG uncovered Hartmann's dishonest claims about working and walking around near the event hotel on that Monday from date/time-stamped photographs she took while sightseeing that were found on her VA-issued computer. Also during this same unnecessarily extended San Diego stay in January 2009, the OIG report describes that Hartmann drove about one and a half hours to HHV where she toured the HHV facility, met with HHV representatives for several hours, and played golf with two HHV representatives.

CharityWatch's president spoke with Diane Hartmann on June 10, 2014, and she expressed her view that the OIG report was politically motivated and "completely ridiculous and false." However, the report cites that Hartmannn acknowledged to the OIG her "bad judgment" and the serious nature of her actions regarding the destruction of evidence and making false theft reports to intentionally interfere with the OIG investigation. Hartmann's acknowledgments in hindsight seemed to hold little value in the eyes of the OIG based on the conclusions regarding Hartmann's issues of misconduct in the OIG report. With the OIG concluding that Hartmann "had complete disregard for the laws, regulations, and VA policies which governed her ethical conduct," and considering all of Hartmann's wrongful actions during her time at the VA that are substantiated by the OIG, in CharityWatch's opinion, Hartmann is an irresponsible, unworthy, and incredulous choice for HHV's new CEO.

The "Leadership" page of HHV's website promotes that Diane Hartmann, CEO, brings to HHV a "wealth of experience" from her many years working at the VA, but conveniently leaves out the part about the misconduct and unethical behavior that taint her experience there. Although HHV claims that it believes it "is ready to forge a renewed partnership with the public, with no reservations," according to its May 8, 2014 letter to CharityWatch, we are not fooled. By choosing Hartmann as its new CEO, HHV has left CharityWatch questioning the integrity and accountability of HHV's leadership and advises donors to do the same.

[Note: CharityWatch is reaching out to the current HHV Board of Directors concerning Diane Hartmann's appointment as the new CEO and will provide an update if the board members are responsive to our questions.]